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I N T E R N A T I O N A L  T R A D E   P R E S E N T A T I O N  B Y  H A R R Y
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I N T E R N A T I O N A L T R A D E P R E S E N T A T I O N B Y H A R R Y

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  • 1. November 1st 2010 Presentation by Harprit(Harry) Pal S Marahrh ELT Program for Accounting and Finance Professionals
  • 2. OVERVIEW  Important terms  Reason of International trade  Export Documents  Process of International Trade  Protectionism  How Protectionism works  Free Trade Areas & Associations  Position of Canada in World’s Trade
  • 3. IMPORTANT TERMS  Economy of Scale: Reduction in cost per unit resulting from increased production, operational efficiencies  Factors of Production- Labour & Capital  Balance of Trade: Trade Surplus- Exports>Imports Trade Deficit- Exports<Imports  Balance of Payment: Visible Trade + Factors of Production  Demurrage & Gurantee of payment- a charge required as compensation for the delay of a ship or freight car or other cargo beyond its scheduled time of departure  Quotas, Tariffs, Bans: Restrictions on imports as a measure of protection for specific goods, or industries, or domestic producers, or due to government policies
  • 4. TRADE TRANSACTIONS GOODS PAYMENT S BINFORMATION
  • 5. DATA EXCHANGE IN INTERNATIONAL TRADE Arrival Notice Instruction Invoice, PO Importer’s Bank Ocean Carrier Customs House Broker LineofCredit PerformaInvoice Shipping & funding detail Vessel Booking Request Cargo Status Shipping & Funding Detail Exporter’s Bank Importer Exporter Vessel Booking Confirmation Bill of Lading Rated Bill of Lading Dock Receipt Freight Forwarder Purchase Order LCConfirmation Dockreceipt Delivery Order Vessel Manifest Dock receipt Release/Approval Demurrage guarantee& payment Inland Carrier Manifest Pick-up & Delivery Order Importer Notice Converted Vessel Manifest Customs (Export) Port Customs ( Import ) OriginalB/L,InvoicePO Inland Carrier Marine Insurance Company Fund Transfer Confirmed Line of Credit Release/Hold Notice Purchase Exportation Importation Import Terminal Operator Proforma Invoice Export Declaration Export Declaration Bill of lading, Documentation Import Docs Export Terminal Operator
  • 6. MAIN EXPORT DOCUMENTS  Commercial Invoice: bill for the goods from the seller to the buyer  Bill of Lading (B/L): Document signed by a transportation company (carrier) to show receipt of goods for transportation from and to the points indicated.  Insurance Certificate  Certificate of Origin  Quality and Weight Certificates  Export Licence  Letter of Credit - A letter on the part of a bank and at the request of one of the bank’s customers, to pay a named beneficiary a specified amount of money (or to deliver an item of value) if the beneficiary presents documents in accordance with the terms and conditions specified in the letter of credit  Vessel's manifest - International carrier is obligated to make declarations of the ship's crew and contents at both the port of departure and arrival. The vessel manifest lists various details about each shipment by B/L number 
  • 7. LIST OF DOCUMENTS  Enquiry  Order  Payment order  Forwarding instructions  Forwarder's invoice  Goods receipt  Air waybill  Road consignment note  Rail consignment note  Cargo manifest  Bill of lading  Freight invoice  Export licence  Exchange control doc.  Certificate of origin  Dangerous goods declaration  Import licence  Customs delivery note  Documentary credit
  • 8. WHY INTERNATIONAL TRADE Food Cars USA 2 8 Japan 3 6 Principle of Absolute Cost Advantage According to Adam Smith, both countries can gain from international trade through specialization (USA producing more food and Japan producing more cars): Suppose the USA produces 1 car less, this frees up 8 labourers Labour Per Unit These 8 labourers can now produce 8/2 = 4 units of food To keep the production level of cars constant, Japan should make 1 car more. This requires 6 labourers These 6 labourers could have made 6/3 = 2 units of food Conclusion: USA Japan change world prod. production of cars: -1 +1 0 production of food: +4 -2 +2
  • 9. PROTECTIONISM  Restriction of imports into a country by government measures  Reasons for Protectionism  Protects businesses from extra competition  Helps new businesses to develop before they face competition  Helps protect jobs  Prevents imports of harmful goods  Methods  Quotas: Limits on the quantity of a product that can be imported into a country e.g. 100,000 cars  Regulations: Laws and safety guidelines (embargoes are considered strong diplomatic measures to prohibit commerce and trade with a particular country)  Teriffs or Import Duties: Taxes on imported goods. They raise the price to customers and make them less attractive
  • 10. HOW PROTECTIONISM WORKS PY QYO S D P w P t F A G a b c d Pw-Price in international market Pt-Price of imports after tax ①price increase Q1 Q2Q3 Q4 Import before tax ②imports decrease after tax e B C H ③loss of consumer is a+b+c+d ④producer surplus e increased by a ⑤government tariff income is c Benefit:a+b+d(producer) +c(government) Supply Demand P r i c e Quantity Sw
  • 11. FREE TRADE AREAS & ASSOCIATIONS  Trade without any protectionism / trade barriers between countries  Examples of free trade areas/organizations  North American Free Trade Agreement (NAFTA)  Free Trade Area of Americas (FTAA)  European Free Trade Association (EFTA)  European Union (EU)  Association of Southeast Asian Nations (Asean)  World Trade Organization (WTO/GATT before 1995)  Asia-Pacific Economic Corporation (APEC)  MERCOSER (Mercado Comun del Sur-Southern Common Market)
  • 12. INTERNATIONAL TRADING PARTNERS Percentage of World, 1996
  • 13. CANADA IN INTERNATIONAL TRADE 0 50 100 150 200 250 US EU JAPAN UK Exports in billion Imports in billion 0 200 400 600 800 1000 1200 1400 China Germany US Japan Neitherlands France Italy Belgium RepofKorea UK HongKong Canada * All Data is in Billion $ (US) Major Partners of Canada Top 13 Trading Countries
  • 14. POSITION OF CANADA IN WORLD’S TRADE 0 200 400 600 800 1000 1200 1400 Billion $ (US)
  • 15. WE HAVE DISCUSSED  Important terms in International Trade  Benefit of International trade  Documents used in International Trade  Process of International Trade  Protectionism & how it works  International Free Trade areas & Associations  Canada’s position in International Trade
  • 16. THANK YOU ! Harprit(Harry) Pal S Marahrh Program of Accounting and Finance Professionals Costi, Brampton, ON, Canada Tel.: (647)867-1325, e-mail: harpritpal@live.com

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